Extra Point

by Jack Tenney, Publisher

November 2009

Macro and Micro

Are you into macro or microeconomics?

If you are honest, like me, you’ll
answer either “neither” or “micro” —
nobody is into macro anymore,
because, face it, macro is just too
darn big.

For instance, there is a proposal to compensate Social Security recipients for a zero COLA adjustment by shooting them another $250 as a one-time “Go-to-a-movie-and-get-a-haircut” spiff. When viewed as the sum of all the checks (billions), that’s macroeconomics. That extra juice to the economy will add a little velocity to the money wheel and maybe even knock a few basis points off the unemployment number, or that’s what John Maynard Keynes would have argued.

Looked at through microeconomic glasses, you can see how someone could now afford to check golf clubs on the flight, watch in-flight television, enjoy a snack, sandwich, and two glasses of wine going and coming: $20 first bag; $50 golf bag; $6 television; $4 snack; $8 sandwich; $12 wine, doubled for the round trip equals $200.

Maybe you could check out the LEAPS (Long Term Equity AnticiPation Security) for a way out of the money call under a buck, and buy two on the theory that it will take more than a year to know if you actually lost it with the outside chance you’ll turn it into enough to worry about losing: GE Jan. 2011, $22.50 calls @ 91 cents; $203.99 including commission when GE was trading at $16.20.

In big government, macro is projecting the effect of allowing marginal tax rates to sunset. In local government, micro is about proposing to close the town dump on Mondays.